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TG-658
Good afternoon.
A year ago, trade was plunging by more than a third, global output was contracting at an annual rate of 6 percent, financial markets were frozen, and people were losing their jobs at an alarming rate.
A year ago, we acted with unprecedented force and speed to pull the global economy back from the abyss.
Together, we injected $5 trillion of global fiscal stimulus and mobilized an additional $1 trillion for international financial institutions to raise global output, support growth, and restart international trade.
In the United States, the $787 billion American Recovery and Reinvestment Act (ARRA) was put in place to support incomes and demand.
While controversial at the time, our decision to subject large financial institutions to stress tests through the Supervisory Capital Assessment Program (SCAP) and make the results fully transparent marked a turning point in global financial markets. Since that time, U.S. banks have raised more than $150 billion in high-quality capital.
Because of our decisive and coordinated measures at home and across the G-20, the world economy is growing and the financial system is healing.
Last April, the IMF was projecting global growth in 2010 of just 1.9 percent. It is now projecting growth of 4.2 percent, an increase of 2.3 percentage points. Trade has risen more than 25 percent, and finance is flowing again to emerging markets.
But much remains to be done.
Although the economic recovery is gathering momentum, the pace of expansion still remains uneven across countries and regions and unemployment is still unacceptably high.
As we work to reinforce a recovery led by private demand, we need to rebalance the global economy.
In the United States, we are moving to stimulate private investment and job creation and to strengthen the foundation for future growth. Private savings have increased significantly. President Obama has outlined a series of proposals that will reduce the deficit from more than 10 percent of GDP in FY 2010 to just below 4 percent in FY 2014. Our current account deficit, as a share of the economy, has fallen by over 3 percentage points since its peak in 2005.
For countries with large external surpluses and high savings rates that are lagging the recovery, there is a strong case for policy reforms that will strengthen domestic demand, promote consumption growth, and reduce the reliance on exports for growth.
In large emerging economies, we have seen encouraging signs of a shift toward more rapid consumption growth that needs to be sustained and reinforced by a return to market-oriented exchange rates, where appropriate.
We all agree on the need for a strong global framework of financial reforms to provide for a more stable global financial system, with consistent rules enforced more evenly across countries.
Achieving such a framework will require both continued international coordination and bold efforts at the national level.
Next week, in the United States, the Senate will begin consideration of strong and comprehensive financial reform legislation. That legislation, consistent with the reforms put forward by the Administration and passed by the House of Representatives, imposes strong constraints on risk taking; limits the size of institutions; brings transparency and robust oversight to the derivatives market; provides strong protections for consumers and investors; and gives us the tools to wind down large, failing financial firms without putting the rest of the financial system or the taxpayers at risk.
Taken together, these reforms will lay the foundation for a more stable, resilient financial system, less prone to panic and collapse.
This financial crisis caused enormous suffering, affecting the most vulnerable in countries around the world. In the shadow of the financial crisis, we face a crisis of hunger and malnutrition.
Yesterday we came together to launch the new Global Agriculture and Food Security Program.
We are seeing progress to advance our commitment to phase out inefficient fossil fuel subsidies.
I look forward to the conclusion this weekend of a transformative reform agenda for the World Bank, including new capital. The World Bank will be more effective with a best practice disclosure policy, a unified financial framework that frees up additional resources for the poor, greater performance orientation, and a clear focus on core missions.
We continue to move to modernize the governance structures for both the World Bank and the International Monetary Fund to reflect today's global economic realities.
We have worked together over the past year to restore growth. The global recovery is gathering momentum. And we are committed to continue to work together to build a more resilient financial system and a more balanced and stronger pattern of global growth.
Thank you.
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